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U.S. recession risk rises as U.S.-China trade tensions heat up: Reuters poll

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BENGALURU (Reuters) – Over the last month the U.S.-China trade war has boosted the risk of a U.S. recession, say a strong majority of economists polled by Reuters, who now put the chances of that happening in the next two years at 40%.

That is up from a median 35% in last month’s poll, the first time it had dipped slightly from where it held since December last year, before a crushing sell-off on Wall Street as 2018 came to a close, in part because of those worries.

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U.S. President Donald Trump has dismissed the ongoing trade war with China as a “little squabble,” but there are clear signs of the conflict already having an impact on the economy, and the stock market has become jittery again.

I have a hard time thinking of a scenario in which a further escalation of the trade tension we currently have would not make recession risk higher,

said Michael Hanson, head of global macro strategy at TD Securities.

We are already in a situation where the level of tariffs that are either imposed or threatened to be imposed over the next several weeks are really quite high … and a move to basically putting tariffs of 25% on everything we import from China is a very real drag in the economy,

said Hanson.

While only a single-digit percentage of respondents say a U.S. recession is likely in the coming year, more than one-quarter of economists polled see a greater than 50% probability of recession within two years.

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